Walgreens Plans to Close Certain Stores: What We Know So Far

WAlgreens shares fell Thursday morning after the drugstore chain signaled more store closures are on the way, missed third-quarter earnings expectations and lowered its annual forecast.

The company said it was completing a multiyear plan to close some underperforming stores in the U.S., but did not detail how many were targeted.

Walgreens and major competitors like CVS and Rite Aid — which is undergoing bankruptcy protection — have closed hundreds of stores in recent years. Businesses have faced challenges that include years of strict reimbursement of their revenues and rising costs of operating their locations.

Additionally, analysts say they have also been hit by growing competition from Walmart, Amazon and other discount retailers on sales of products sold outside their pharmacies. Consumers also tend to become more price conscious when inflation rises.

Walgreens has also been closing VillageMD primary care clinics that it had been setting up adjacent to its stores in order to increase its presence as a healthcare provider.

Chief Executive Tim Wentworth said in a statement that the company continues to face challenges that include “persistent pressure on the U.S. consumer.” Wentworth, who joined the company last fall, has been conducting a review of its business.

Walgreens Boots Alliance Inc. operates approximately 12,500 drug stores worldwide, including more than 8,600 locations in the United States.

The company said it earned $344 million in the fiscal third quarter, with adjusted earnings totaling 63 cents per share. Revenue increased nearly 3% to $36.35 billion.

Analysts had expected earnings of 68 cents per share on revenue of $35.9 billion, according to FactSet.

Walgreens also said it now expects adjusted profit to range between $2.80 and $2.95 for the fiscal year, which ends in August. This is below the forecast of $3.20 to $3.35 per share that had declined in March.

Analysts expect $3.20 per share.

This guidance cut was “not too shocking to us as the company now begins the next stage of its recovery,” Michael Cherny, an analyst at Leerink Partners, said in a research note.

But the overall results surprised investors. Shares of the Deerfield, Illinois company sank nearly 16% to $13.20 in premarket trading.